A blog about Jedox Performance Management Technology and how to use it.

Tag Archives: Retail

The courage to experiment

There is a basic assumption in marketing that you need to experiment with A/B testing. Do you get more conversions through the web page with the green “buy now”, or a red “compare price” button?

No experienced marketer ignores data that can improve campaign effectiveness.

A/B testing was popularized through advocates like John Merriam in the early 20th century, when mail-order catalogs were common. Advertisers then paid by word count and ad size. Sound familiar? Their focus, like with google adwords or sponsored facebook stories today, was to maximize effectiveness at minimum cost.

When it comes to planning, it is unwise to assume that investing money, time, and effort on new initiatives will automatically achieve the expected outcome.

That may be fine when your organization and people are doing things they’ve successfully done many times before.

When you’re innovating, trying new things, you have to be ready to sometimes fail. Marketers understand experimentation well.

So do modern IT departments where traditional highly structured ‘waterfall’ based projects have evolved into business-driven projects which agilely iterate towards achieving business goals. They expect to ‘learn’ while they ‘do’.

But strategic planning and annual budgeting often seems to continue planning more reminiscent of a 5-year centrally planned economy, than a dynamic retail environment.

There is the top-down planning, by the people who are paid to lead; the bottom-up planning by the people who are paid to do – and some kind of uncomfortable merging to make these fit.

It’s no wonder that they disconnect, when they don’t even start with the same value drivers.

ApparelretailerC&A use driver-based cost planning and variance analysis to measure performance against the actual value drivers – not just financial metrics.

900 suppliers from 40 countries and 37,500 staff provide for over 2 million customers daily across 1,500 stores in 21 countries.

Their key to success was to make it clearly-defined for store managers to understand in operational terms, through an on-demand, and easy way for stores to quickly communicate changes to management.

Management use the value-drivers to construct a compelling narrative for the organization to believe in and align around.

A critical consideration was empowering technology. C&A employed Jedox because it unified planning, forecasting and reporting so anyone could review KPIs and seamlessly adjust plans in one place. Critically, Jedox was easy to use. The modern platform available from any mobile device meant minimum training and support.

C&A stores are empowered to understand how they directly contribute to corporate performance. They communicate to store support and back office services with common language.

This is Part 4 in a series on retail value-drivers, how companies use them in planning, reporting and analysis and lessons for mid-sized retailers to punch above their weight and better share information.

The gap between how a retailer (tries) to present itself, and how a consumer actually perceives it comes down to alignment. To provide a consistent experience to the customer, you must ensure business departments align with each other, and with your strategy.

While business divisions exist for different reasons, how they report, analyze and plan is very similar. By unifying these activities using and agile platform, departments can collaborate using common value drivers on shared data.

Like this:

Essential new ways to unify your people, data, and process for unfair advantage

Why do you need value drivers?

In this an example, a retailer has around 200 stores, operating on slim margins. They’ve used strategies to reduce overheads and improve cross-channel selling, including using poorer performing stores as online fulfilment centers, and using pop-up stores to shift slow-moving stock.

These were fine strategies, but hit snags in execution. The information shared between management and operations, didn’t clearly articulate the plan, or provide enough feedback, so neither management nor operations really understood how they were going.

This year management are starting again.

The disconnect between strategy and execution played out again.

Existing divisions couldn’t change their existing practices, and work together effectively to bring about goals.

Each business department filtered and interpreted the goals into language they could understand. If the goal related to an area outside their business function, they ignored it. Departments didn’t understand or value what other parts of the business where doing, because the information they shared with each other used no common terms of reference.

It’s normal for operational budgeting and planning to be seen as a task based on prior year data, instead of an opportunity to communicate strategy.

If departments operate in silos and focus on their own business function, they have no common language in the retail value-drivers that they measure themselves against.

At best, they risk losing out on opportunities to work together to achieve common corporate goals.

At worst, they work against each other, measuring their own performance against conflicting KPIs while your laudable strategic goals end up diffused, delayed, and disrupted.

Withholding information hurts efficiency. It also hurts sales. In fact, information asymmetry often stops a sale. Not enough information is often why the shopper puts the product back on the shelf.

The gap between how a brand (tries) to present itself, and how a consumer actually perceives it comes down to alignment. To provide a consistent experience to the customer, you must ensure business departments align with each other, and with your strategy.

This is Part 3 in a series on retail value-drivers, how companies use them in planning, reporting and analysis and lessons for mid-sized retailers to punch above their weight and better share information.

The gap between how a retailer (tries) to present itself, and how a consumer actually perceives it comes down to alignment. To provide a consistent experience to the customer, you must ensure business departments align with each other, and with your strategy.

While business divisions exist for different reasons, how they report, analyze and plan is very similar. By unifying these activities using and agile platform, departments can collaborate using common value drivers on shared data.

Financial measures show the effect of strategy, but say nothing about why you are performing the way you are – or how each department might improve.

By focusing on underlying value drivers, you measure, plan and improve the activities that impact sales and profitability – wherever people sit in the organization.

The best performing retailers draw insights from past performance into forward-looking targets that align business results with corporate strategy.

Drivers like footfall (number of people who walk into a store) are intuitive enough to be understood by anyone in the organization. When you target increasing conversion rates, (turning lookers into buyers), every department has a different job to achieve the goal. This means innovation. HR for example, might change recruitment focus from store managers, with a focus on inventory management to ones which are sales trainers.

The essence of value drivers is not new. Strategy Maps and Balance Scorecards translate high-level goals into measurable operational outcomes across different business functions. And what gets measured, gets managed – Lord Kelvin said back in 1883 “if you cannot measure it, you cannot improve it”.

What’s changed is availability of data – lots of data.

There are three prerequisites to align on value drivers.

Select the right value drivers
It’s not about picking the most obvious ones. Use modelling and sensitivity analysis based on historical and external data to identify which drivers make the highest impact.

Correlate relationship between functional activity and value drivers.
The crucial translation from the past to the future. This means more data, and more modelling. Working from your gut, or what people already know, means you only repeat the past.

Frequent feedback loops to measure and adjust performance.
Value drivers must be measurable (ideally derived from operational system data) and made available to everyone in easy-to-understand and easy-to-use formats, like mobile apps.

This is Part 2 in a series on retail value-drivers, how companies use them in planning, reporting and analysis and lessons for mid-sized retailers to punch above their weight and better share information.

The gap between how a retailer (tries) to present itself, and how a consumer actually perceives it comes down to alignment. To provide a consistent experience to the customer, you must ensure business departments align with each other, and with your strategy.

While business divisions exist for different reasons, how they report, analyze and plan is very similar. By unifying these activities using and agile platform, departments can collaborate using common value drivers on shared data.

Like this:

Essential new ways to unify your people, data, and process for unfair advantage

Data is at the heart of new retail. Consumers are walking, tweeting, data distributors.

The online channel is no longer separate. In a world where shoppers are online, all the time, the retailer must provide a unified experience across every consumer interaction.

Analytics and channel optimization is at the heart of new retail. Agile technology enables channel-specific and context-sensitive customer engagement. While online retailers briefly had the advantage, in-store analytics now give bricks-and-mortar the tools to fight back and bring more traffic to stores, higher shopper engagement, and deeper loyalty.

Not that it’ easy, because the environment keeps shifting. Disruptive new business models, from subscription commerce, to consumer-to-consumer and on-demand, are based on loyalty to retailer, loyalty to brand, and on convenience. Consumers now seek convenience and personalization at every stage of the shopping journey. The world has changed.

Or has it? If you’re the CEO of a medium sized retailer, it’s nice to hear Amazon invests 6% of sales in technology to compete on analytics, but how can you keep up?

As a medium-sized retailer, chances are that there are a few fundamentals needed in aligning strategy with execution. You need to unify data and business processes along your networked supply chain. Before you optimize your price, promotions, ranging, space, stock, customer lifecycle, and marketing mix, you need to align goals and behavior between your business departments.

To create alignment, you need to start talking the same language based on a common understanding of value-creation.

This series introduces retail value-drivers, how companies use them in planning, reporting and analysis and lessons for mid-sized retailers to punch above their weight and better share information.